Biz & IT —

McKinsey: businesses reaping benefits from Web 2.0

A new survey of nearly 1,700 diverse companies finds that Web 2. right.

Whether you call it Web 2.0, social media, or a complete waste of time, businesses seem to like where it's all going. A new survey of nearly 1,700 businesses by McKinsey & Company finds that using Web 2.0 technologies can lead to increased communication and productivity, more successful marketing strategies, and—surprise—even better products.

McKinsey has been studying the effects of Web 2.0 on the internal and external operations of businesses for three years. This past June, it asked executives to answer some "state of Web 2.0" questions about the overall effectiveness of harnessing social media. Sixty-nine percent of respondents reported measurable business benefits in the previously mentioned areas, as well as gaining better access to knowledge, lowering the cost of doing business, and producing higher revenues.

"We found that successful companies not only tightly integrate Web 2.0 technologies with the work flows of their employees but also create a 'networked company,' linking themselves with customers and suppliers through the use of Web 2.0 tools." The more effort companies put into Web 2.0, the more they report getting out of it.

Unsurprisingly, the most often-reported business benefits of Web 2.0 are a greater ability to share ideas, improved (and faster) access to knowledge experts, and reduced costs of communication, travel, and operations. Businesses also report a decreased time to market and improved employee satisfaction.

The technologies fueling this social business prosperity are also quite popular with consumers: blogs, wikis, and podcasts. Video sharing also saw a spike in usage since last year's survey, and other emerging tools like rating and tagging content also received some credit. Respondents also thank social networks for helping to create better products by actively engaging customers and soliciting feedback during development.

The rest of the report finds that most companies can gain some benefit from jumping into Web 2.0, though businesses with revenues exceeding $1 billion are more likely to report improvements versus smaller or consumer companies. The report notes that, while companies can benefit from both better internal networking and stronger ties with customers, it takes a little more effort than simply signing everyone up for the next business-centric Twitter knock-off.

New tools need to be carefully selected to fit into an organization's workflow, and McKinsey found that traditional financial or performance incentives don't seem to work as motivation for continued use. Respondents report that the informal incentives of the Web 2.0 culture—ratings by peers, recognition or "likes" on meaningful contributions—combined with active use by company executives, have been the best way to ensure adoption by the workforce.